Business Registration in Nepal: Rules & Tips to Get Approved

Nepal has become an attractive destination for foreign investment in recent years, with foreign direct investment steadily increasing. This growth highlights the importance of business registration in Nepal for international firms planning to expand. In this guide, we explain how foreign companies can register a business in Nepal, covering entity choices, regulatory requirements, and approval tips. Follow our step-by-step advice to ensure your Nepalese company is approved smoothly and complies with all legal rules.

Business Registration in Nepal: Entity Types and Structures

Nepal allows several types of business structures for foreign investors. The most common is a Private Limited Company, a locally incorporated entity. A private company is defined as one with 1–50 shareholders that cannot publicly offer shares. Nepal does not impose a statutory minimum paid-up capital for private firms, but regulators require each foreign investor to bring a minimum investment. Foreigners may hold up to 100% of such companies in most sectors. A private limited company can conduct full commercial activities according to its Articles. To incorporate, file the prescribed application form, the Memorandum and Articles of Association, and IDs of the promoters. The Office of Company Registrar typically issues a Certificate of Incorporation within a few days once documents are verified.

A Public Limited Company requires at least 7 shareholders and a minimum capital set by the government. Public companies may offer shares to the public but face stricter disclosures and governance rules. Foreign investors usually prefer private companies unless planning to list shares. The registration process and approvals for a public company are similar to a private one, but with additional compliance for securities regulations.

Foreign firms may also operate through a Branch Office or Liaison Office. A branch is an extension of the parent company and can engage in all commercial activities, including signing contracts and earning revenue. However, establishing a branch requires approval from the Department of Industry. After approval, the branch must register with the Office of Company Registrar, appoint a local auditor, and file annual financial statements. A branch is taxed like a domestic company. In contrast, a liaison/representative office is strictly non-commercial, performing market research or liaison work only. Liaison offices register with the Department of Industry but are not required to register with the Office of Company Registrar. They hire minimal staff and generally pay no corporate tax if they do not generate revenue.

For quick reference, the table below compares key features of common Nepali entity types for foreign businesses:

Step-by-Step Company Registration Process

1. Reserve a Company Name. Submit your proposed name for approval. The Office of Company Registrar checks uniqueness and legality, usually within 2–4 business days. Avoid names identical or confusingly similar to existing companies or those violating public policy.

2. Prepare and Submit Documents. Collect all required paperwork, including the application form, Memorandum and Articles of Association, and ID copies of shareholders. If setting up a foreign branch or subsidiary, include the parent company’s registration certificate, notarized MoA/AoA (with Nepali translation), board resolution authorizing the investment, and a Power of Attorney for the Nepali representative. Submit these files through the OCR portal.

3. Obtain FDI/Industry Approval. Foreign investments must be registered with the Department of Industry. Projects under a specified limit can follow an automatic approval route, typically cleared in 1–2 weeks. Larger projects require committee review and additional documentation.

4. Register with the OCR. File the final company registration application. Pay the government fee based on your authorized capital. The OCR reviews and, if everything is correct, issues a Certificate of Incorporation within 30 days.

5. Complete Tax and Compliance. Open a Nepalese bank account and deposit the initial capital. Register for a Permanent Account Number (PAN) and Value-Added Tax (VAT) if applicable. Complete municipal registrations and other local licensing. Your company is then fully licensed to operate.

Required Documents at a Glance:

• Company papers: Notarized Certificate of Incorporation and MoA/AoA

• Board authorization: Certified resolution approving the Nepal branch or new company

• Shareholder IDs: Passport or citizenship copies

• Representative power of attorney

• Office address proof: Lease or property documents

• Foreign investment plan: Project report detailing capital, sector, and funding source

Other Tips and Considerations

• Name Approval: Choose a distinctive name. The OCR will reject names identical or too similar to existing firms or names against public policy.

• Language Note: Company names can be in Nepali (Devanagari script) or English, but not both. Provide accurate translations if registering both versions.

• Timelines: Name reservation usually clears in 2–4 days. Company registration is typically approved in under a week for domestic setups. Foreign branch registrations may take 2–3 weeks.

• Costs: Total costs include government fees and professional fees. Branch office fees vary depending on investment size, while liaison offices pay a flat fee.

• Taxes: Standard corporate tax is 25% plus 13% VAT on local sales. Branch offices are taxed like local companies, whereas liaison offices are exempt from corporate tax if they earn no revenue.

Frequently Asked Questions

Q: How do foreign companies register a business in Nepal?
Foreign firms incorporate through the Office of Company Registrar. Reserve a company name, submit the MoA/AoA and other documents, and obtain foreign investment approval. After approval, the OCR issues the Incorporation Certificate, and the company can register for PAN and VAT.

Q: Can a foreigner start a company in Nepal?
Yes. Foreign individuals or corporations can own up to 100% of a private or public company in most sectors. Approval from the Department of Industry and compliance with local company regulations are required.

Q: How long does company registration take in Nepal?
Name reservation takes 2–4 business days. After filing a complete application, approval usually occurs within 3–7 days. Branch offices or foreign subsidiaries may require 1–2 weeks due to additional verification.

Q: How much does it cost to register a company in Nepal?
Fees depend on authorized capital. Companies with higher capital pay more. Branch office registration fees vary with investment size, and liaison offices pay a flat fee. Legal and professional fees should also be considered.

Q: What documents are required to incorporate in Nepal?
Required documents include the registration form, MoA/AoA, and ID copies of shareholders. Foreign-owned companies must also submit the parent company’s certificate, a board resolution, Power of Attorney, office address proof, and the foreign investment proposal.